Thailand Property Lawyer
Mr. Sirichot "Beer" Chaiyachot joined Siam Legal in 2008 handling the litigation and commercial cases. He performed processes of litigation including drafting of demand letter, preparation of case files, submission of documentations to the court including assist representation with senior associates. In 2010, he trained in another area of law where he handled the Property section of the firm. He took care of the legalities involved in acquisition of property and property solutions by Foreign and Thai nationals. Sirichot earned his Law degree at Naresuan University International College and had been admitted to the Thailand Bar Association in 2011. He got his notary public license since 2012. Mr. Beer is also fluent in speaking English and Thai.
As an in-house property lawyer, he determines the condition of the seller’s title to the property, and serves as a liaison to the Land Department, ministerial departments and other government authorities. He prepares the title deed if required to, registers all legal documents, and ensures smooth transfer of ownership. He drafts various agreements including Sales and Purchase Agreements, Loan Agreements, Mortgage Agreements, Lease Agreements and Thai Will.
Below are questions frequently asked by property buyers who want to acquire lands, houses, villas or condominium units within the legal requirements. Sirichot discussed various options available to foreigners who are interested to buy immovable property in Thailand.
What are the restrictions in owning a land in Thailand?
A foreigner or a foreign juristic entity such as company, foundation or associations of which majority of shares are held by non-Thai persons is not allowed to be an owner of land in Thailand.
What are the restrictions on buying a house or other construction on land?
According to Thai Land Code, any foreign national, be it a company or individual, may own a house or construction built on land that belongs to a Thai national or on the land he leases from a Thai national.
What are the ways for a foreigner to own a land in Thailand?
While there is restriction on land ownership in Thailand for foreigners, there are some ways for foreigners or foreign corporations to acquire property without circumventing Thai law. Each option has its corresponding opportunities, advantages and disadvantages. Different options available are different to each case depending upon the circumstances surrounding the case of the foreign juristic entity. There are special laws which grant foreigners permission to own land in special cases. I will only provide general information for each option. Any specific advice on any particular matter is subject to proper consultation with a Thai lawyer.
- Setup a Thai company to buy property and register the ownership of land
One option for a foreigner to own land and house would be by setting up a Thai Limited Company. A foreigner can purchase a piece of land which will be under the name of Thai Limited Company, provided the majority of the company shares are Thai-owned. To be considered as Thai national company and own a land, it needs to have 49% of the total equity shares held by Thai nationals and that there is a greater number of Thai shareholders than foreign national shareholders.
In this set-up, a foreign owner may have both control of the company and freehold ownership over the land. This is a costly option as it entails lot of expenses, papers for you to sign, the expenses and cost involved are quite high and unreasonable. It can be burdensome over a long period of time because of annual taxes. However if you’re not going to engage in the business for real and you just set up a company to purchase property, this can be deemed as circumventing the law regarding the restriction of foreigner purchasing the land in Thailand. This means that you need to keep and maintain the business for real, not just a way to acquire the land.
- Through Leasehold
As per Thailand Civil and Commercial Code, long term lease is another alternative legal option for foreigners to use, stay, occupy and utilize the land for residential purpose for a certain period of time. One challenge in lease agreement is when a termination of the tenancy happens, for example during a breach of contract, or when the lessee has to leave prior to agreed date, or when the lessee has broken a specific rule that was mentioned in the agreement (nonpayment of rent or illegal activities). In this case the lease agreement can be terminated, and the lessee may not be able to collect his/her deposit or the remaining rent that he/she has paid for the lessor in advance.
Another downside of this option is that the lease agreement is terminated upon the death of the lessee because lease right is an exclusive right being given by the lessor to specific lessee who the lessor selected, thus a personal right. However, the lessor and the lessee can indicate in the agreement that the lease right can be inherited. Without a clear statement the lease right cannot be inherited and ceases when the lessee passes away.
- An alien can own a land if permitted by special law such as BOI.
A foreign juristic entity with substantial investments benefiting the Thai economy can buy land if it obtained investment promotion from the office of Board of Investments (BOI) provided that the land is to be used for promoted business and that the company has more than 49% shares held by non-Thai national OR has more foreign national shareholders than Thai national. Total land area should be a maximum of 5 rai for offices and 10 rai for personnel residences.
- By virtue of the Act on Industrial Estate Authority of Thailand
A foreign juristic entity will be entitled to own a land if it operates its business within the estate or location of the Industrial Estate which must be approved and supervised by Industrial Estate Authority of Thailand under Section 44 of the Industrial Estate Authority of Thailand Act. (See Foreign Ownership of Industrial Land.)
- By virtue of Petroleum Act
A foreign juristic entity may have special privileges and exemptions for land ownership granted for the duration of their business in Thailand under Section 65 of the Petroleum Act if it receives concession for oil and/or gas operation throughout the time of the concession period.
For leasehold, what is the maximum length of time under Thai law?
The long term lease will allow you to live, to stay, and occupy the land or the house for a certain period of time. Thai law allows foreigners to lease real properties in Thailand such as land for a maximum duration of thirty (30) years. It may be extended for second lease term (another 30 years) although it is enforceable the renewal lease is not automatic. You will have to request the lessor or the landlord to comply with the agreement, for example go to the Land Office and register the second lease term for you. That is not very convenient so it would be better that you only have 30 years.
If the foreign owners decide to sell the property, what are the property taxes and fees?
For easy saying in total it will be around 7-10% of the declared sale and purchase price or the government appraisal, depending on whichever is higher. There will be a 2% transfer fee, 3.3% for the specific business tax or the stamp duty at 0.5%.
The ownership transfer of land, house or condo unit must be registered on the Land Office upon payment of transfer fees, taxes and stamp duty.